The rapid advancement of Artificial Intelligence (AI) presents local governments with significant opportunities to enhance public service delivery through more efficient resource allocation, shortened processing times, and increased responsiveness to citizens’ needs.
This article provides an overview of the current state of AI adoption by cities around the world. It illustrates its potential through two contrasting local cases: ET City Brain in Hangzhou, China, and AI-enabled public services in Victoria, Seychelles.
The state of AI in cities
In October 2023, the “State of Cities: Generative AI in Local Government” interviewed 100 mayors and city officials worldwide to understand their perspectives on the use of AI in local governance.
Below is a map showing the participating cities
These are some of the results from the survey
Levels of interest in adapting AI
Level of implementation
Most interested topics for Gen AI application
Barriers for Gen AI adoption in cities
Overall, the findings reveal a clear gap between the interest of cities and its capacity for implementation. While many recognize the potential of AI to improve citizen engagement, strengthen data-driven decision-making, and optimise service delivery, only a limited number have moved beyond experimentation into operational use.
Key barriers remain significant, particularly related to human capital, financial resources, and digital infrastructure. For many local governments, the challenge is not whether AI can deliver value, but how to adopt it responsibly, affordably, and at scale.
As city officials noted:
Generative AI has the potential to transform an entire industry, in order for me to progress rapidly in the upcoming years, an in-depth knowledge of AI is vital because we are entering a period of generational change.”
…the biggest question is how it can add value to the community. Another is the ethical considerations of AI. And also, what will the impact of AI be on the economy and jobs?”
These perspectives underscore the need for local governments to balance innovation with governance, ethics, and long-term social outcomes.
Hangzhou, China
The city government of Hangzhou is leveraging AI and digital twin technologies to transform urban management through its flagship initiative, City Brain.
City Brain aims to improve urban governance and public services by addressing key urban challenges using machine intelligence and real-time urban data. A core objective is to make government operations more responsive, predictive, and citizen-centred.
Launched in 2016, ET City Brain, a collaboration between the Hangzhou city government and the Alibaba company to alleviate traffic congestion. The system integrates data from people, vehicles, and road infrastructure into a unified platform, applying AI algorithms to generate an operational, real-time model of city traffic conditions. This enables city officials to dynamically manage transport systems, such as providing real-time parking availability and optimised route guidance.
In March 2025, Hangzhou launched ET City Brain 3.0, becoming the first city in China to integrate AI-driven, self-evolving digital intelligence into comprehensive urban management.
Key functions include:
- Improving public services through AI-powered virtual assistants, covering areas such as legal support, mental health consultations, and medical insurance services.
- Optimising city operations through digital twin technologies and AI analytics, for example, via the Survey Smart Guardian System, which enables real-time monitoring of geological surveys and helps prevent construction-related risks.
- Opening AI capabilities to the industry, enabling private-sector innovation and application development on top of the City Brain platform.
As of today, the mental health virtual assistant has reached 1.8 million users, while the Survey Smart Guardian System has monitored 1,743 projects and issued 2,434 risk alerts. These outcomes demonstrate how AI can move beyond efficiency gains to support public safety and wellbeing at scale.
Credit: the government of Zhejiang province
Credit: CNN
Victoria, Seychelles
In Victoria, the capital of the Seychelles, public agencies are adopting AI to modernize customs, logistics, and public service delivery in a small island context, where Port Victoria handles approximately 95% of national imports and receives around 800 vessel calls annually.
A €400,000 AI-driven customs and logistics upgrade has been implemented through the city’s digital transformation program and the Port Victoria Management Information System. By integrating digitalization with AI tools, the system streamlines vessel clearance and cargo flows. Real-time analysis of port, logistics, and customs data improves operational efficiency, reduces terminal congestion, and accelerates trade processes that are critical to the island economy.
At the citizen-facing level, AI virtual agents are being deployed across web, SMS, and voice channels to provide accurate policy information and reduce physical queues. This allows public servants to focus on more complex cases that require human judgment and intervention.
Beyond administrative efficiency, AI is also being applied to environmental protection, supporting marine conservation and monitoring efforts, an important priority for Victoria as a city in a small island developing state.
These initiatives are reinforced by the Seychelles Innovation Hub, established in 2018, which supports startups, international partnerships, and pilot projects linking sustainable tourism, marine conservation, and digital public services.
Victoria’s experience illustrates how smaller cities and island contexts can adapt AI pragmatically to strengthen local public services while balancing economic efficiency, environmental stewardship, and institutional capacity.
Credit: UNIS
Conclusion
The cases of Hangzhou and Victoria demonstrate that AI is no longer a futuristic concept but a practical tool for local public service innovation. By integrating real-time data, predictive analytics, and citizen-centred digital tools, cities can optimise operations, improve responsiveness, and improve quality of life. Beyond efficiency, AI enables experimentation with novel governance approaches, supports sustainable practices, and fosters industry collaboration.